Accounting and tax

legal regulations and tax law in Indonesia

  1. Indonesian companies are taxed at a flat company tax rate of 25% for both domestic and international income streams. In contrast, individuals are taxed at the normal marginal rates of tax – with the top Indonesia tax rate being 46.5%;
  2. Annual audited financial statements and corporate tax return is submitted to the Indonesian Taxation Office following Indonesia business setup. It is usually possible to obtain an audit exemption;
  3. Following Indonesia company formation, resident companies and individuals settle their tax liabilities either by monthly payments, third party withholdings, or a combination of both;
  4. Resident Indonesian companies are required to withhold tax at a rate of 20% from the payments to foreign companies. However, Indonesia boasts 65 double tax treaties which minimize withholding tax for service fees, dividends, interest, royalties, and branch profits. To claim the reduced rates, the foreign party must present its certificate Certificate of Domicile (CoD) to the DGT;
  5. An individual is considered tax resident if he is present in Indonesia for at least 183 days per year;
  6. Annually, medium sized business pay corporate income tax, health insurance contributions, social security contributions, tax on interest, property tax, stamp duty, and also value added tax;
  7. The Indonesian investment law allows investors interested in Indonesia business setup to repatriate their capital while their corporation is still in operation. The repatriation may be in the form of after-tax profits, reimbursement of expatriate manpower expenses;
  8. For an active trading company, the accounting and tax fees are an estimate of Healy Consultants fees to efficiently and effectively discharge your annual company accounting and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants will more accurately advise accounting and tax fees. For a dormant company, Healy Consultants fees are only US$950;
  9. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations;
  10. Eligible companies can access a total 30% tax investment allowance over a six-year period;
  11. If a public company has at least 40% of its shares traded on the Indonesian stock exchange, it is eligible to receive a 5% reduction on income tax;
  12. Investors in priority sectors can receive a 100% tax break of between five and 20 years after operations start, provided certain criteria are met (for example, a minimum investment of IDR500 billion);
  13. Resident taxpayers and permanent establishments (PEs) of foreign companies can pay their tax liabilities by direct payment, third-party withholdings, or a combination of both. Foreign companies without a PE in Indonesia must settle their tax liabilities for their Indonesian-sourced income through withholding of the tax by the Indonesian party paying the income.

Legal and compliance

Healy Consultants Compliance Department guides our Client through the legal and tax obligations outlined under Indonesia company law to support company formation.

  1. The minimum amount of paid up capital to be invested in a foreign-owned company (PMA) is US$100,000 for company registration. A PMA must have at least two shareholders and one director;
  2. The company directors are appointed, replaced, and dismissed by the shareholders. Within 30 days, shareholders should notify the Ministry Of Labor And Human Resources of any changes to the company structure. The identities of shareholders and directors are on the public register;
  3. A PMA must also appoint at least one commissioner, who is the supervisory body over the directors. Under the Company Law, a PMA comprises a two-tier management structure including the Board of Directors (“BOD”) and the Board of Commissioners (“BOC”) as the supervisory board;
  4. After setting up a company in Indonesia, an annual return must be lodged. A director or secretary of the company must confirm relevant details of the company for the public register including names and addresses of all directors, address of principal place of business, and details of shareholders and their shareholdings;
  5. A local company secretary is not required to register up a company in Indonesia, however we recommend one be appointed to ensure compliance with the Indonesian corporation act;
  6. All business activities conducted in Indonesia receive government approvals and permits and licenses for establishing a company in Indonesia. For instance, general trading and services activities need a Trading Business License (Surat Izin Usaha Perdagangan – SIUP). Mining companies require a Mining Business License (Izin Usaha Pertambangan – IUP);
  7. There is an obligation to register particular products with the government, including food, medical equipment, cosmetics, medicine. For food, cosmetic and medicine products, the registration is with the Food and Drugs Supervisory Agency; medical equipment with the Ministry of Health. The registration process takes approximately 6 weeks to complete;

Contact us

For additional information on our accounting and legal services in Indonesia, please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi